Dunk

iTrader: (1)

Looking at 5 or (more likely) 10 yr offset fix, I'm planning to remortgage at 2* my current outstanding balance, but only to call upon the the unneeded extra if I can put it into a savings account earning inexcess of the fixed rate. (which currently is the case and it could earn me c.£200 a month)
(If savings rate is less than savings clearly you don't use it.)
Mrs D doesn't pay tax and the int would fall under her personal allowance
Required mortgage is likely to be gone in c.8 yrs

Cons:
Early redemption is based on the facility not the balance, (it's an offset so leave it fully offset but not redeemed)
Rates drop and I pay a premium on the fixed (personally can't see a base rate below 4% and would the banks pass it on ?). (It'lll take 6-8wks to setup, so if a major swing happens I can shift and lose the arrangement fee.)

Tempted to lock in for the 10 yr due opportunity for the saving / fixed rate spread increasing and hence greater opportunity to make more out of it.
Anything I'm missing ?

D

Flatcapdriver

The fact that a ten year fix will lock you in for a long period, thus making your life fairly inflexible in terms of accomodation.

michaelro

Move the mortgage to another house...

Flatcapdriver

The fixes I've looked at have all had either redemption penalties or other hidden costs attached which have restricted mobility so unless this one hasn't I'm assuming there will be additional costs attached.

Dunk

iTrader: (1)

I'm not planning to move again, it's fully portable and if I did move then has the agreed (now not then) facility for me to borrow more, or downsize and offset further, hence I don't recognise any risk other then the normal fix rate.

D

Flatcapdriver

And the rate is?

Dunk

iTrader: (1)

4.99% on a 5yr, 5.15% on a 10yr.

D

Flatcapdriver

No brainer then. Take the ten year fix as historically interest rates have averaged around the 7% mark for the last couple of decades and if there are no penalty issues with full portability I'd say go for it. I've done something similar on an interest only mortgage but gone for the five year term, however there isn't the portability you've got there.

Dunk

iTrader: (1)

Exactly, I struggling why I should listen to my natural short termist tendancies. Early redemption is 3% yr 1, 2% thereafter (to the end of the fix term), which is not far off market leading. Capital over payments (due to nature of the offset) are uncapped, so you've no advantage to redeem it early unless the rates are on the floor. (In which I'm sure I could find someone with a substantial deposit account, who'd gladly get more % from me than they'd get in their savings a/c !)

D

fast bloke

It should work OK - How much is the arrangement fee/survey/solicitor fee?

Dunk

iTrader: (1)

Reasonable at c.£700 all in. Looks like I'm going to go for 10 yr fix.

D

fast bloke

That is an excellent deal. It looks like a no brainer. What lender is it with? (My mortgage sourcing system has about 40000 deals at the minute, but either that one isn't on there or the lender hasn't included the fully flex fixed offset details with the deal. )

Dunk

iTrader: (1)

F Direct

D

fast bloke

Is that F Direct as in Finance Direct, First Direct (first plus) or someone complelty obscure (TBTH I thought we had every lender on there, sometimes someone new can fall through the gaps for a while, but with a deal like this they we need to get them on the system)

Dunk

iTrader: (1)

First Direct

first direct mortgage - our latest mortgage offers - overview

Does that mean you'll pay me commission ?
(Don't flood it until I've got my app in !)

D

fast bloke

Its getting the **** hammered out of it on Monday. Even if BBR falls to 4.75 for a while, that deal will be a killer over 10 years. Those deals are on the system, but they didn't tell us it was fully flexible and offset. Without those features it is a decent deal, with those features it is 0.75% better than the next best option.

You would think that if you have a market beating deal, you would at least let the brokers know about it

fast bloke

p.s. - First Direct pay brokers pennies, so I'll split them with you. (on the flip side, happy clients generate loads of referrals, but I'm not splitting that )

PaulC72

Can I ask possibly a stupid question, if the offset is fixed for 10 years but you want to pay it off in 8 wouldn't you be libale for some sort of early completion fee? or by not redeeming the completion for the other 2 years gets you round the problem?

Mortgages always interest me but I admit I am no expert

Dunk

iTrader: (1)

Thing is a won't redeem it, it'll just be in full offset, AND in the last two years I have the opportunity to borrow at 5% and place the savings on deposit if the savings rate in excess of 5%. On the amount I'm thinking of, a 2% spread is well worth having.

D

PaulC72

Cheers Dunk.